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Trust Safe Pay, LLC v. Dynamic Diet, LLC

United States District Court, D. Massachusetts

July 27, 2018

TRUST SAFE PAY, LLC, Plaintiff,
v.
DYNAMIC DIET, LLC, KOSTAS VADOKLIS, and VILMA VADOKLIS, Defendants.

          MEMORANDUM AND ORDER ON DEFENDANTS' MOTION TO DISMISS PLAINTIFF'S SECOND AMENDED (CORRECTED) COMPLAINT (#78).

          M. Page Kelley, United States Magistrate Judge

         I. Introduction.

         Defendants have moved to dismiss plaintiff's claims in the Second Amended (Corrected) Complaint (SACC) (#72), [2] the fourth complaint plaintiff has filed since the initiation of this action in California in 2016. In its opinion granting defendants' previous motion to dismiss, this court outlined various deficiencies in plaintiff's pleading and gave plaintiff the opportunity to re- plead, with certain limitations. (#64 at 18 n.20 (“Any amendment shall be limited to the extent necessary to comply with the deficiencies as identified in this Order. No. further amendment is allowed.”).) Plaintiff has re-pled its case, but has not remedied the deficiencies.[3] Critically, plaintiff has failed to state a claim for direct or indirect violation of copyright, the only federal claims present. The court, therefore, GRANTS defendants' motion to dismiss. The court DISMISSES the copyright claims, (#72, Counts I-III), with prejudice, and the remaining state law claims, (#72, Counts IV-VI), without prejudice.

         II. The Facts.

         The factual background is set forth in the court's prior opinion. See, #64 at 2-5. This litigation “stems from a friendship gone awry between plaintiff's principal, Evelina Juchneviciute, her partner and co-member of Trust Safe, Darius Kersulis, and the individual defendants. The problems allegedly resulted in the individual defendants surreptitiously stealing proprietary information relating to [diet product business] Trust Safe, which information was then used to open and operate a competing company, ” Dynamic Diet LLC (DDL). Id. at 2. The claimed stolen information included an algorithm[4] that allowed plaintiff to increase the efficiency of its advertising by using identified search words, a “Keyword List, ” to only advertise to individuals who were likely to purchase plaintiff's products. (#72 ¶¶ 15-25.)

         Of particular relevance to the jurisdictional determination here, plaintiff is “a Massachusetts limited liability company with its principal place of business in Idaho.” Id. ¶ 1. “Plaintiff is informed and believes, and thereon alleges that Kostas and Vilma are individuals residing in Nantucket, Massachusetts.” Id. ¶ 2 “DDL is a corporation organized and existing under the laws of the Commonwealth of Massachusetts, having a principal place of business at 7 West Creek Road, Nantucket, Massachusetts.” Id. ¶ 3.

         According to plaintiff's SACC, DDL “owns the website DynamicDiet.com/ (the ‘Site') through which DDL sells and promotes products that directly competes [sic] with Plaintiff's product.” Id. ¶ 52. DDL also owns a second “website DietInsight.org that purports to review and compare competing diet supplements in order to assist consumers with deciding which diet supplements to purchase. [. . .]” Id. ¶ 53. “Darius is the owner and operator of the diet review website ConsumersCompare.org, which contains text that is subject to a copyright application submitted to the U.S. Copyright Office (the “CC Work”).” Id. ¶ 55. Darius assigned ownership in the CC work to plaintiff. Id. ¶ 56. “Evelina is the author and claimant of text contained on Plaintiff's website [sic] PureSlim1000.com and PS1000.com, which is the subject of a copyright application filed with the U.S. Copyright Office (the “PS Work”).” Id. ¶ 57. Evelina assigned ownership in the PS Work to plaintiff. Id. ¶ 58. “In or around December of 2016, Plaintiff filed applications for registration for the PS Work and the CC Work (collectively “Plaintiff's Works”). See Copyright Office Emails, attached as Exhibit A hereto.” Id. ¶ 59 (emphasis in original).

         Plaintiff alleges further that, “[u]pon information and belief, in early 2015, for a commercial purpose, DDL knowingly, wrongfully and without permission copied and used a portion of the CC Work as demonstrated by Exhibit B attached hereto (comparing Plaintiff's [website copies] pages 1-2 with DDL's [website copies] pages 3-4).” Id. ¶ 60 (emphasis in original). Plaintiff includes additional exhibits as well, purporting to compare portions of plaintiff's and DDL's websites to demonstrate alleged copying of CC and PS Work. Id.¶¶ 61-68, Exs. C-J. “Without authorization, the DDL used, republished, distributed and displayed to the public worldwide Plaintiff's Works on DDL's Websites. DDL used Plaintiff's Works with the pre-existing knowledge that such original expression was owned by Plaintiff.” Id. ¶¶ 69- 70. Based on these allegations, plaintiff claims defendant DDL violated plaintiff's copyright, and the individual defendants engaged in contributory and vicarious infringement. Id. Counts I-III.

         Defendants' motion to dismiss the SACC for failure to state a claim is presently before the court. (##78, 79.) Plaintiff opposed the motion (#83) and objected to it (#85), and defendants replied (#90).[5]

         III. Standard of Review.

         The appropriate standard of review was stated in the court's prior opinion:

A Rule 12(b)(6) motion to dismiss challenges a party's complaint for failing to state a claim. In deciding such a motion, a court must “‘accept as true all well-pleaded facts set forth in the complaint and draw all reasonable inferences therefrom in the pleader's favor.'” Haley v. City of Boston, 657 F.3d 39, 46 (1st Cir. 2011) (quoting Artuso v. Vertex Pharm., Inc., 637 F.3d 1, 5 (1st Cir. 2011)). When considering a motion to dismiss, a court “may augment these facts and inferences with data points gleaned from documents incorporated by reference into the complaint, matters of public record, and facts susceptible to judicial notice.” Haley, 657 F.3d at 46 (citing In re Colonial Mortg. Bankers Corp., 324 F.3d 12, 15 (1st Cir. 2003)).
In order to survive a motion to dismiss under Rule 12(b)(6), the plaintiff must provide “enough facts to state a claim to relief that is plausible on its face.” See Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007). The “obligation to provide the grounds of [the plaintiff's] entitlement to relief requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do.” Id. at 555 (internal quotation marks and alteration omitted). The “[f]actual allegations must be enough to raise a right to relief above the speculative level, ” and to cross the “line from conceivable to plausible.” Id. at 555, 570.
“A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (citing Twombly, 550 U.S. at 556). However, the court is “‘not bound to accept as true a legal conclusion couched as a factual allegation.'” Id. at 678 (quoting Twombly, 550 U.S. at 555). Simply put, the court should assume that well-pleaded facts are genuine and then determine whether such facts state a plausible claim for relief. Id. at 679.

(#64 at 5-6.)

         IV. Discussion.[6]

         A. Copyright Infringement - Count I.

         “To establish copyright infringement under the Copyright Act, ‘two elements must be proven: (1) ownership of a valid copyright, and (2) copying of constituent elements of the work that are original.'” Johnson v. Gordon, 409 F.3d 12, 17 (1st Cir. 2005) (quoting Feist Publ'ns, Inc. v. Rural Tel. Serv. Co., 499 U.S. 340, 361 (1991)). Plaintiff has not pled sufficiently either element.

         1. Ownership of a Valid Copyright.

         Subsection (A) of 17 U.S.C. § 411 states that “no civil action for infringement of the copyright in any United States work shall be instituted until preregistration or registration of the copyright claim has been made in accordance with this title.” Plaintiff does not claim to own any registered copyright. See #83 at 13-14 (“Plaintiff has three (3) copyright applications currently before the Copyright Office.”). The ...


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